Oil prices rose on Monday, supported by optimism that the U.S. government shutdown could soon end a development that could boost demand in the world’s largest oil consumer while such hopes helped offset concerns about rising global supplies.
Brent crude futures gained around 50 cents, or 0.79%, to settle at $64.13 a barrel, while U.S. West Texas Intermediate (WTI) crude rose by 53 cents, or 0.89%, to reach $60.28 a barrel.
On Sunday, the U.S. Senate moved toward passing a bill to reopen the federal government and end a 40-day shutdown, which had halted government operations, delayed food aid, and disrupted air travel.
Notably, this initial step by U.S. lawmakers to resolve the shutdown helped revive risk appetite in global markets.
Analysts, however, voiced concerns over the impact of widespread flight cancellations on U.S. jet fuel demand, as airlines canceled more than 2,800 flights and delayed over 10,200 on Sunday marking the worst day for disruptions since the start of the shutdown.
Brent and WTI crude had both fallen by about 2% last week, logging their second consecutive weekly decline amid fears of oversupply. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to a slight production increase in December, while pausing any further output hikes during the first quarter of next year.
Meanwhile, U.S. crude inventories continue to rise, and the amount of oil stored on tankers in Asian waters has doubled in recent weeks. This comes as tightened Western sanctions reduced imports into China and India, alongside import quota shortages that have limited demand among Chinese independent refiners.
Analyst Varga noted a clear gap between the rising volumes of crude stored offshore and the reduced availability of Russian oil products.
Additionally, Russia’s Tuapse refinery on the Black Sea halted fuel exports earlier this month following drone attacks, according to industry sources and vessel-tracking data from LSEG.
Russian oil producer Lukoil also faces growing operational challenges as the November 21 deadline approaches for ending transactions with the company under U.S. sanctions, following the collapse of its planned asset sale to Swiss commodities trader Gunvor.
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